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Pfizer ups bid for AstraZeneca to $124.5b

US drugmaker Pfizer said on Sunday it had raised its offer for British rival AstraZeneca to 69.3 billion pounds ($124.5 billion), or 55 pounds a share, and would walk away if AstraZeneca did not accept it.

Pfizer wants to create the world's largest drugs company, with a headquarters in New York but a tax base in Britain, where corporate tax rates are lower than in the United States. It has met entrenched opposition from AstraZeneca, as well as many politicians and scientists who fear cuts to jobs and research.

The US group said its new offer was final and could not be increased. It said it would not make a hostile offer directly to AstraZeneca shareholders and would only proceed with an offer with the recommendation of the AstraZeneca board.

Pfizer also increased the cash element in its offer to 45 per cent, with AstraZeneca shareholders set to receive 1.747 shares in the enlarged company for each of their AstraZeneca shares and 2,476 pence in cash.

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Two banking sources earlier described 55 pounds a share as the "magic number" at which a deal could get done.

Pfizer said it had written to AstraZeneca's chairman on May 16 offering 53.50 pounds a share but had been told that this still substantially undervalued the company, prompting it to make a further sweetened offer. AstraZeneca had already rejected an earlier approach worth 50 pounds a share on May 2.

"We believe our proposal is compelling for AstraZeneca's shareholders and that a Pfizer-AstraZeneca combination is in the best interests of all stakeholders," Pfizer Chief Executive Ian Read said in a statement.

He expressed frustration at AstraZeneca's refusal to engage in talks and urged the British company's shareholders to pressure its board to start discussions.

"Following a conversation with AstraZeneca earlier today, we do not believe that the AstraZeneca board is currently prepared to recommend a deal at a reasonable price," Read said. "We remain ready to engage in a meaningful dialogue but time for constructive engagement is running out."

In the absence of further discussions or an extension of the deadline for making a firm offer under British takeover rules, Pfizer's proposal will expire at 5 p.m. London time on May 26.

AstraZeneca said it had no immediate comment on Pfizer's latest move.

DRUG PIPELINE HOPES

The British firm has laid out details of its pipeline of new drugs and argues there is no inevitability about a Pfizerdeal, although its management also acknowledges the board would have to consider a compelling bid.

Investors have backed AstraZeneca in rejecting 50 pounds a share, but many have said they would want it to engage in discussions if Pfizer came back with an improved offer.

There has been a mounting political backlash against the proposed deal in Britain, the United States andSweden, where AstraZeneca has half its roots.

The Swedish government launched a concerted effort on Friday against a merger it fears will lead to cuts in science jobs and research, echoing concerns aired by British lawmakers at two parliamentary hearings last week and fears for US jobs in states where AstraZeneca has a large presence.

Pfizer's bid would be the largest foreign takeover of a British firm and is opposed by many scientists and politicians who fear it will undermine Britain's science base.

British Prime Minister David Cameron has said he wants more assurances from Pfizer, and science ministerDavid Willetts said last week he would like to see longer guarantees on investment than the five years currently promised by Pfizer.

The UK government has also held exploratory discussions with Brussels about strengthening its ability to forcePfizer to honour commitments on jobs and research under European Union rules.

But Cameron, head of the free-market Conservative Party, has also said Britain does not want to be seen to be pulling up the drawbridge to foreign companies.